Ukraine War tightens prices of edible oils in India

India heavily depends on Ukraine for sunflower oil

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Ukraine War tightens prices of edible oils in India
Imports of sunflower oil to India is being affected by Russia and Ukraine war Photo Credit: Sofia Ornelas on Unsplash

The Solvent Association of India (SEA) predicts sunflower oil imports are likely to fall to around 80,000 tonnes in April as against 212,000 tonnes in March 2022.

80% of the Sunflower oil imports of India are from Ukraine and Russia, primary of which comes from Ukraine. India had imported around 127,000 tonnes of sunflower oil from Ukraine, 73500 from Russia, and 11,900 from Argentina, and these consignments had left for India before the war began between the two countries.

However, no shipments came in April from Ukraine; hence sunflower oil imports may fall to nearly 80,000 tonnes as now they arrive only from Russia and Argentina.

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Massive deficit in sunflower oil imports

The high prices of sunflower oil in the international market at $ 2,200 a tonne combined with less availability and high domestic rates of Rs. 172,000 per tonne has deflated the demand and usage of sunflower oil. The shortage of sunflower oil has been replaced by other edible oils like soybean oil, groundnut oil, and palm oil in South India and by rice bran oil and refined mustard oils in North India.

India has contracted 45,000 tonnes of Russian sunflower oil at higher prices for shipments in April since edible oil prices in the local market increased due to the shutdown of the Ukrainian supply. Even though the price of edible oils surged last year, the federal government managed to bring it down through several measures like duty rationalization.

During the last month, the prices of soy oil, palm oil, and other edible oils have come down, providing relief to the common man. The average CIF price (Cost, Insurance plus freight) for crude sunflower oil import was $ 2,125 a tonne in March against $ 1,506 a tonne in February.

60% of edible oils in India are imported

The oil year scales from November to October. India imported 1.05 million tonnes of sunflower oil during the period November – March of the oil year 2021-2022 as compared to 0.91 million tonnes in the year 2020-2021. As per data released in March 2022, edible oil exports increased up to 1.05 million tonnes in March against 0.98 mt in February.

The import of edible oils increased to 5.6 million tonnes in the initial five months of the oil year 2021-2022 compared to 5.24 million tonnes in 2020-2021. As per SEA director Mehta, the import of RBD palm oil expanded to 0.77 mt from November to March 2021-2022. Crude oil import dropped to 1.9 mt in November – March 2021-2022 as compared to 2.9 mt last year.

Strong need for self reliance on edible oils

A spokesperson from the food ministry stated that India is working on medium to long-term plans to lower its reliance on edible oil imports. Gnanasekar Thiagarajan, the head of trading and hedging strategies at Kaleesuwari International, said that India has to build an edible oil reserve to cut off from any price hikes.

This will allow the government to encourage supply during times of shortage, reduce prices, and curb hoarding. India’s food stockpile consists of grains like wheat and rice that are produced in large quantities. However, India depends on imports for 60% of its needs for edible oils.

The government introduced a $ 1.5 billion initiative named the National Mission on Edible Oils-Oil Palm the previous year to improve self-reliance.

As per the Economic Survey prepared by the finance ministry, India aims to double the crude palm oil production to 2.8 million tons by 2029-30 from an approximate figure of 1.12 million tons in 2025-26.

The Solvent Extractor’s Association director, Mehta, has advised that more land should be diverted to grow soybeans, sunflower, and rapeseed crops, and it would be essential for the government to spend Rs. 50 billion per year to leverage the oilseed output.

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